An author's critique of capitalism after the fall of the Soviet Union is flawed, but provocative.

John Gray is a true conservative. He is petrified of change. All custom is justified in his view: "Market reforms in India are challenging traditions of marriage and caste which had survived almost unchanged for 40 years following the end of the British Raj." Remarkably, Gray means this as a criticism of market reforms.

For years, Gray was a New Right intellectual who embraced free markets, in the hopes of preserving the status quo. Then the market betrayed him by proving itself to be an agent not just for change, but for permanent revolution. False Dawn is a testament to his disillusion -- and a provocative critique of capitalism, something few intellectuals have dared to do since the fall of the Berlin Wall.

The human craving for security is a constant, whining refrain in False Dawn. And yet, Gray never takes an intellectually honest look at the catastrophy of stagnation that results when governments try to insulate people from change. (Communism is one glaring example.) Gray glosses over the Soviet experience as an Enlightenment project very much like current efforts to create a global free market. His assertion that "Marxism-Leninism and free-market economic rationalism have much in common" is too absurd to discuss seriously.

The requirement for constant transformation in capitalism is not Gray's only beef with free markets. He is also concerned about economic inequality. (How he reconciles this concern with his reluctance to reform the caste system in India is unclear.) He describes the rise in economic inequality in Russia, but is quick to point out that it is much worse in the U.S. His analysis of the problems of inequality would have been more compelling had he considered where he'd rather be poor, in Russia or the U.S., and addressed the fact that absolute poverty is often the unintended consequence of pro-equality policies.

Gray also condemns the "rationalist hubris" of free markets. It is hard to imagine what an economic system should be founded on if not logic. However, Gray believes that the Anglo-Saxon "cult of reason" is seeking to eliminate diversity by stamping its own cookie-cutter version of capitalism around the world. This won't work, he warns. Capitalism has a way of adapting to local environments. This sounds more like a promise than a threat.

Yet another of Gray's warnings is that democracy and free markets aren't compatible. The founding fathers had this same concern -- the propertyless many would vote to seize everything belonging to the propertied few. Gray ignores 200 years of history when he resurrects this anxiety.

Gray's most valid critique is that free markets aren't "free" at all -- they require big governments to administer them. True enough.

Gray calls for a global regulatory body to guard against market failures, while ensuring diversity. Without such a regulatory body, Gray argues, no single government or even bloc will be able to implement Keynesian policies in the not-so-distant future. The world will revert to the boom-and-bust capitalism of the Depression era or fall into anarchy.

Gray is so focused on market failures that he does not take into account political failures. Global competition for capital is not the only impediment to Keynesian spending; the other problem is politics. Politicians are pretty good at spending in an economic slump; they have a horrible track record implementing the second Keynes instruction -- cutting back in good times. Capital markets serve as a useful check on such political failures; a global regulator would likely exacerbate the problem.

False Dawn has many flaws. But it raises some thought-provoking questions. And Gray should be commended as one of the few intellectuals brave enough to write a post-Communist critique of capitalism. Plus, George Soros says on False Dawn's cover that it "should be read by all who are concerned about the future of the world economy." If you are short of time, start with the postscript, which is an excellent summary of the book.

Kim Malone is a New York-based freelance writer. Previously, she worked as a policy advisor for the Federal Communications Commission and as an analyst for the Soviet Companies Fund investing in enterprises converting from military to civilian production.